Agricultural economics began as a way to study the allocation of scarce resources in a farming context. Over time, however, the discipline grew in scope to encompass issues of natural resource use, and rural and international development. Today, agricultural economics is a branch of the larger field of economics, and is studied in many U.S. universities.
Agricultural economics applies principles of economics to issues of agricultural production, natural resources, and rural development. It mainly focuses on principles of microeconomics, which examines the actions of individuals, households and firms. Agricultural economics is sometimes referred to as agronomics, defined as the use of economic methods to optimize actions by farmers and ranchers.
Agricultural economics began in the 19th century as a way to apply economic principles and research methods to crop production and livestock management. The roots of the discipline, however, can be found in the writings of the classical economists of the 1700s and early 1800s. The works of Adam Smith, Thomas Malthus and David Ricardo discussed land as a factor of production and issues of human population versus its ability to produce food.
Economist C. Ford Runge, in a working paper for the University of Minnesota, identified two theoretical schools of thought that gave rise to agricultural economics. One was neoclassical economics---specifically, its theory of the firm as a profit-maximizing agent---applied to issues of farm production. The second involved marketing and organizational issues stemming from a depression in U.S. agriculture in the late 1800s.
In the 1960s, agricultural economics expanded beyond issues of farm and ranch management and agricultural production to issues of international rural development and natural resource use. This expansion of agricultural economics resulted from the contraction of the agricultural sector in the world's major industrial nations. This development gave agricultural economics more of an international focus.
Agricultural economics includes a number of specialty areas, including agribusiness, agricultural policy, farm and ranch management, rural development, international development, natural resource and environmental economics, and agricultural marketing.
Many land grant colleges in the United States have degree programs in agricultural economics. In addition, the U.S. Department of Agriculture's Economic Research Service is one of the nation's largest agricultural economic research organizations.
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